Pipelines and Alternatives

It’s time for a fresh look at Energy East

Details

Published: 20 August 2018

Source:Globe and Mail

The initial Energy East project proposal – a 4,500-kilometre pipeline that would carry 1.1 million barrels a day of Western Canadian crude oil to refineries in Eastern Canada – was stymied by regulatory overkill and tepid political support in Ottawa, Ontario and Quebec.

But the dynamics on several of these fronts are changing and, with a Speech from the Throne contemplated this fall, there is an opportunity to change tack.

The political mood in Ontario has already shifted as a result of the recent Progressive Conservative election victory. The provincial election in Quebec later this year could result in a more receptive mood for a $15-billion infrastructure project funded exclusively by the private sector.

Despite their noble intent, the goals endorsed by the Paris Accord on Climate Change have become somewhat illusory over time. The United States has opted out and commitments by India and China – the next two most prominent polluters – are more distant than apparent. Canada’s pledge is minuscule in the global scheme of things (affecting less than 2 per cent of global emissions) and is, in any event, becoming more aspirational than real.

Furthermore, and despite consistent emphasis on renewables – such as solar and wind power – global demand for fossil fuels as a source of energy is expected to increase until 2040 and beyond, constituting roughly 80 per cent of the total. Cold, winter countries such as Canada will continue to rely on consistent supplies of oil and gas to heat their homes and industries.

Alternative sources of energy will grow alongside, but not instead of, fossil fuels. It is not a case of either/or. Furthermore, pipelines generate lower greenhouse gas emissions than transmission by rail cars or tanker trucks.

Evidence to date suggests that neither carbon taxes nor cap-and-trade schemes do much to curtail emissions. For one thing, they do not alter consumer behaviour. As Philip Cross, a senior fellow at the Macdonald-Laurier Institute wrote, “small carbon taxes are not a serious proposal to curb emissions, but the equivalent of buying a papal indulgence to alleviate our collective conscience.” In short, “feel good” policy. And even higher taxes are rarely palatable.

Regulations on fuel standards and on energy consumption, along with incentives for innovative technologies, are demonstrably more effective – a prime example being the development by Rio Tinto and Alcoa of a process to produce aluminum with zero emissions. Oil sands companies and other industries are moving successfully in a similar direction because it makes economic sense for them to do so.

It is not a question of climate-change denial. Rather, it is an acknowledgment of what works and what does not work. That reality check is coming home to roost as politicians grapple with explanations of policies that voters will endorse, as opposed to cost-free sentiments that can be more universally endorsed.

Over and above the stimulus in terms of jobs and spending that a $15-billion private-sector investment would bring to all regions of Canada, a successful relaunch of Energy East would:

Open Canadian supply to the increasing demand of global markets, which in turn would reduce, if not eliminate, the 30-per-cent discount we are obliged to accept for our oil when we rely on a single market for export, and;

Most importantly, because of the “America First" protectionist practices being pursued by our neighbour and erstwhile economic partner, Energy East would provide the means for Canada to better ensure its own economic destiny.

There is no guarantee the company that initially sponsored Energy East (TransCanada Corp.) would be willing to revisit the project, nor is there any assurance the original list of potential shippers will reinstate their commitments, but the latest U.S. legal setback on the Keystone XL project could prompt some new thinking. The opportunity to give new life to Energy East is at least worth exploring and, unlike nationalization, it would not require one nickel of taxpayer funds. Resuscitation would be an act of bold, visionary leadership, one that would serve our national interest. It would give Canada the key element of a truly transcontinental pipeline and be as much in the national interest as transcontinental railways were more than a century ago.

Governments are remembered best for getting big things right. It is ultimately a matter of choice and political will.